The expectation for long-term continued growth of foreign trade remains quite favorable. As foreign trade continues to improve, so does the absorption of industrial space.**

Vacancy rates for the industrial sector have declined, with Q1 2007 rates of 8.15% down nearly 0.44% from Q1 2006, according to Colliers International.*** The improved vacancy rates, although not uniform across the U.S. due to physical and regulatory supply constraints, have resulted in an improvement of landlord pricing power, with rents increasing for the third consecutive year. **

In terms of performance, industrial property returns remain strong with National Council of Real Estate Investment Fiduciaries (NCRIEF) total returns reaching 18.5% over the trailing 12 months.** The NCREIF Property Index is an index of quarterly returns on investment grade commercial properties owned by the members.. And, according to Torto Wheaton Research, risk adjusted returns for industrial are stronger than the retail and office sectors due in part to the industrial sector’s lower volatility compared to other property types, trailing only apartments.

We are expecting the industrial sector to remain favorably active. We look forward to continued positive absorption and steadily declining vacancy rates as the U.S. consumer spending and global trade continue to increase.

*Source: Bureau of Economic Analysis2Q, 2006

**Source: Torto Wheaton Research2Q, 2006

***Source: Colliers International 2007